Retail in Asia

In Shops

Web, mobile, social commerce to continue reshaping retail shopping in Southeast Asia

Developments in web, mobile and social commerce set to continue reshaping the way goods are bought and sold in markets throughout the Southeast Asia region in the next 12 months, a new study released by global chain optimization provider Manhattan Associates Inc. showed.

The study noted that continued pressure on margins from prevailing economic conditions and an increasingly inflationary environment will force both bricks-and-mortar and online retailers to invest in strategies and technologies that make their assets work harder and help them reach new customers in new markets.

“Online-only retailers have, by and large, been the winners to date in the ongoing retail revolution that continues to see the volume of goods bought online grow and grow," said Scott Gillies, Director of Retail, Asia Pacific at Manhattan Associates. "They are implementing what consumers like about e-commerce into their stores at the same time as investing in their own online offer, and making the overall cross-channel shopping experience seamless for their customers.

He added that retailers, in increasing numbers, are also selling their goods in overseas markets – through online and offline ventures – and building infrastructures and associated systems capabilities that can facilitate this.

Manhattan Associates identified six top trends that are set to influence the Southeast Asia retail scene over the next 12 months:

1 Online retailers facing tough competition

While online-only retailers may have taken a large slice of the online sales market in recent years, bricks-and-mortar stores are investing in their multi-channel offering, meaning that online retailers will now have to up their game to retain market share.

This trend is particularly strong in Thailand and the Philippines, where the growing number of online shoppers has prompted retail brands to offer innovative services such as online gift registries or online shopping combined with in-store pickups and delivery services, according to a report published by Interbrand.

2 Mobile commerce is here to stay

Increased mobile penetration leads to increased mobile shopping and will force retailers to optimize their websites and online shops for smartphone and tablet access.

Retailers will also need to offer brand, store or product mobile interactions to their shoppers. Examples include quick response (QR) codes, gift cards stored in mobile applications like Apple’s Passbook or free applications to scan a product’s barcode and have an instant quote on delivering the same product direct to their home.

Profitably integrating the mobile channel into their existing supply chain networks will require retailers to invest in their supply chain technologies.

3 Winning the showrooming battle

Increasingly consumers visit bricks-and-mortar stores to look at products but then buy them online at a lower price – commonly known as “showrooming”.

In Singapore, the strong Singapore dollar may drive more shoppers towards online avenues, negatively impacting store-based sales.

To win this showrooming battle, retailers will need to build customer profiles based on previous purchases to encourage future transactions. Many traders are also in the process of deploying omni-channel strategies, such as buy online and pick up in store.

To connect all channels and obtain a holistic view of customer activities it will be essential to run an effective and reliable order management system in tandem with efficient supply chain systems and other enterprise systems.

4 Investment in in-store technology accelerates

The next months will see more technology integration between the store and other channels to ensure customers get what they want when they are actually in the store.

At the front-end, tablets, apps, QR codes and interactive screen technologies will be used in innovative ways to facilitate search, payment, and other in-store service options.

At the back-end, order and warehouse management systems as well as supply chain intelligence tools will ensure stock availability and visibility for the orders generated across those multiple channels.

We will see more deployments of these types of initiatives as retailers look to maximize the potential of their high street real estate.

In terms of back-end systems, many retailers will need to take a hard look at the legacy systems that they may have relied on for many years to get products into the hands of their customers but which simply do not support the new way of operating in the fast-changing, multi-channel retail world in which they now exist.

5 A seamless shopping experience across multiple channels will become critical

Consumers demand a cohesive view of the retailer, whether in-store, on the retailer’s website or on its mobile shopping application. They expect to find consistent items, prices, availability, payment methods and promotions across all channels.

For example, retailers like MPH Bookstores have installed interactive kiosks in-store where consumers can choose to order books via the online shop or reserve titles in other MPH outlets.

To meet these increasingly complex demands requires creating a single view of the world that can be facilitated by a distributed order management solution, which provides flexibility in the way supply chains are able to execute fulfillment.

Moreover, an intelligent supply chain management solution helps to move beyond the simple view of inventory held in stores or at the distribution centre and widens the field of vision to encompass all the channels through which the company interfaces with the consumer.

6 International expansion to accelerate

As international retailers continue to realize the business growth opportunities that exist in Southeast Asia, many international brands will continue to accelerate expansion throughout the region.

H&M, Uniqlo and Sephora are just a few of the international brands that have enjoyed success in the region in recent years. Rakuten just opened its online stores in Malaysia last November 2012 but is already seeking to invest USD10 million in new startups in Singapore, Indonesia and Malaysia.

With international stores increasingly penetrating the market, local brands have a fight for survival on their hands and will need to maximize service levels, provide a seamless shopping experience for their customers at the same time as ensuring they’re matching supply and demand in an efficient and effective manner as possible.

“The longer the supply chain becomes, the more complex and prone to risk it will become,” explained Gillies. “In the same way that it has enabled the global sourcing process, supply chain technologies can also manage the complexities of feeding stores globally and the increases in throughputs that ensue."

"Logistics systems such as warehouse and transportation management; supply chain planning for replenishment and applications offering supply chain visibility to view, link and manage a globalised retail operation will be vital,” he added.